Saudi Arabia Not Planning to Raise Interest Rates

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Saudi Arabian central bank Governor Muhammad al-Jasser said he’s not planning to raise interest rates because inflation isn’t a concern and demand for loans isn’t strong enough yet to require higher borrowing costs.

“Raising -- that is only to be determined when conditions show that inflation is either getting out of hand or that demand for credit is exceeding the supply of credit in the economy,” al-Jasser said in an interview yesterday in his office in Riyadh. “I don’t see this now.”

The Saudi Arabian Monetary Agency last year cut the repurchase rate to 2 percent, the lowest since 2004, and the reverse repurchase rate to 0.25 percent as the global credit crunch led to a slump in oil prices, crimping growth in the world’s largest crude exporter. The government’s $400 billion, five-year spending program and oil prices rebounding to around $75 a barrel from less than $35 in February are likely to boost the economy this year.